Transmission

What if a battery storage project could lock in its revenue before it's earned it? SSE and Statkraft have done just that with a battery revenue swap: SSE gave up the ups and downs of battery income for a fixed price, Statkraft took them on, and both energy companies came out with less risk.

On this episode of Transmission, Ed Porter is joined by Josh Brown, Origination Team Manager at SSE, and Cian O'Duffy, Energy Markets Quantitative Analyst at Statkraft, two people behind the deal, to explain how energy trading deals like this work and who could do one next.

They cover:

- How a battery revenue swap is set up, and why it needs far less paperwork than a wind farm PPA.

- Whether a swap changes how you run your battery, and what basis risk means for owners.

- How wind farms, solar farms and energy suppliers could use battery revenues to manage risk.

- Why big businesses might buy a virtual battery instead of building their own.

- What's next for battery storage deals, plus two contrarian views on CfDs and battery revenues.

Ask Ko, Modo Energy's AI analyst, about battery revenues, power prices, wind, solar and data centres: Try for free

Transcript available here

You can watch or listen to new episodes every Tuesday. Transmission is a Modo Energy production. Your host is Ed Porter - Director EMEA & APAC at Modo Energy.

Chapters:

00:00 What is a battery revenue swap?

01:11 How energy trading deals get set up

03:07 Why SSE sold its battery revenue risk

05:11 Why Statkraft wanted more battery risk

06:27 How big the SSE and Statkraft deal is

07:40 How swap contracts work (ISDA explained)

10:39 Does a swap change how you run your battery?

12:35 UK-wide vs regional battery indices

13:55 Can wind and solar farms hedge with batteries?

17:26 Battery revenues vs other ways to hedge

20:27 Virtual batteries for big energy users

24:30 What comes after swaps? Options and floors

28:46 How CfDs affect negative electricity prices

31:02 Why battery revenues could be a rocky ride

33:26 Wrap-up

What if a battery storage project could lock in its revenue before it's earned it? SSE and Statkraft have done just that with a battery revenue swap: SSE gave up the ups and downs of battery income for a fixed price, Statkraft took them on, and both energy companies came out with less risk.

On this episode of Transmission, Ed Porter is joined by Josh Brown, Origination Team Manager at SSE, and Cian O'Duffy, Energy Markets Quantitative Analyst at Statkraft, two people behind the deal, to explain how energy trading deals like this work and who could do one next.

They cover:

- How a battery revenue swap is set up, and why it needs far less paperwork than a wind farm PPA.

- Whether a swap changes how you run your battery, and what basis risk means for owners.

- How wind farms, solar farms and energy suppliers could use battery revenues to manage risk.

- Why big businesses might buy a virtual battery instead of building their own.

- What's next for battery storage deals, plus two contrarian views on CfDs and battery revenues.

Ask Ko, Modo Energy's AI analyst, about battery revenues, power prices, wind, solar and data centres: Try for free

Transcript available here

You can watch or listen to new episodes every Tuesday. Transmission is a Modo Energy production. Your host is Ed Porter - Director EMEA & APAC at Modo Energy.

Chapters:

00:00 What is a battery revenue swap?

01:11 How energy trading deals get set up

03:07 Why SSE sold its battery revenue risk

05:11 Why Statkraft wanted more battery risk

06:27 How big the SSE and Statkraft deal is

07:40 How swap contracts work (ISDA explained)

10:39 Does a swap change how you run your battery?

12:35 UK-wide vs regional battery indices

13:55 Can wind and solar farms hedge with batteries?

17:26 Battery revenues vs other ways to hedge

20:27 Virtual batteries for big energy users

24:30 What comes after swaps? Options and floors

28:46 How CfDs affect negative electricity prices

31:02 Why battery revenues could be a rocky ride

33:26 Wrap-up

Battery storage in Germany has a grid connection problem: far more projects want to connect than the grid can take, so Germany has scrapped first come, first served and moved to a maturity-based allocation scheme that rewards projects that are ready to build. But for 50Hertz and Germany's other transmission system operators, connecting BESS is only half the challenge. Merchant batteries could push grid congestion costs and grid fees up, or bring them down.

Wilhelm Kiewitt, Head of Energy Economics at 50Hertz, one of Germany's four transmission system operators, joins Ed Porter to explain how a grid operator sees the battery boom from the inside.

They cover:

• Why Germany scrapped first come, first served for grid connections, and how the new maturity-based scheme scores projects on land, permits and finance instead of speed.
• How 50Hertz went from a handful of transmission connection requests a year to more than 100, and why even the 14GW of batteries already holding grid reservations may not all get built.
• Should batteries pay more towards wider grid upgrades? Why Wilhelm says no, and why data centres are a different case.
• Dynamic grid fees or smaller bidding zones? Where Wilhelm and Ed disagree on the cleanest way to send batteries to where the grid needs them.
• Could merchant batteries cut Germany's roughly 4 billion euros a year in congestion management costs, or push them up?

Building in Germany? Ask Ko, Modo Energy's AI analyst, what a battery earns there today, how it compares with wind and solar, and where power prices are heading. Try for free.

Transcript available here

Themen: Batteriespeicher, Netzanschluss, Reifegradverfahren, Netzentgelte, Engpassmanagement, 50Hertz

Battery storage in Germany has a grid connection problem: far more projects want to connect than the grid can take, so Germany has scrapped first come, first served and moved to a maturity-based allocation scheme that rewards projects that are ready to build. But for 50Hertz and Germany's other transmission system operators, connecting BESS is only half the challenge. Merchant batteries could push grid congestion costs and grid fees up, or bring them down.

Wilhelm Kiewitt, Head of Energy Economics at 50Hertz, one of Germany's four transmission system operators, joins Ed Porter to explain how a grid operator sees the battery boom from the inside.

They cover:

• Why Germany scrapped first come, first served for grid connections, and how the new maturity-based scheme scores projects on land, permits and finance instead of speed.
• How 50Hertz went from a handful of transmission connection requests a year to more than 100, and why even the 14GW of batteries already holding grid reservations may not all get built.
• Should batteries pay more towards wider grid upgrades? Why Wilhelm says no, and why data centres are a different case.
• Dynamic grid fees or smaller bidding zones? Where Wilhelm and Ed disagree on the cleanest way to send batteries to where the grid needs them.
• Could merchant batteries cut Germany's roughly 4 billion euros a year in congestion management costs, or push them up?

Building in Germany? Ask Ko, Modo Energy's AI analyst, what a battery earns there today, how it compares with wind and solar, and where power prices are heading. Try for free.

Transcript available here

Themen: Batteriespeicher, Netzanschluss, Reifegradverfahren, Netzentgelte, Engpassmanagement, 50Hertz

Battery storage investment in Europe now depends less on whether the revenue exists and more on how it gets financed. With Italy's first MACSE auction won largely by a single player while Germany's fully merchant market is pushing lenders towards shorter, tighter debt, investors have to work out what makes a battery project bankable without a long-term contract.

Grace Kankindi, Deputy Head of Investment Management at Aquila Clean Energy, joins Ed Porter to walk through how she assesses battery investments across multiple European markets.

They cover:

- Why the first MACSE auction worked as designed, even though prices cleared low and one bidder took most of the contracts, and what new anti-concentration rules could change in round two.

- What happens to Italian battery projects that miss out on MACSE, from tolling to the capacity market, and why Italian lenders still won't back fully merchant projects.

- How lenders are financing merchant batteries in Germany, with debt terms of around 3 to 7 years instead of 15 to 20, and cash sweeps to pay debt down faster.

- The risk investors most often underprice, the optimiser, and why the lowest profit share isn't always the cheapest deal as German two-hour battery revenues fall.

- Why timing decides returns in smaller markets like Lithuania and Finland, why Poland is next on Grace's radar, and why she thinks contracted revenue is riskier than it looks.

Want to stress-test how a German battery's revenues hold up as saturation sets in? Ko, Modo Energy's AI analyst, is built for exactly these questions.

Transcript available here

Chapters

0:00 Intro

1:22 MACSE Auction Results and What People Got Wrong

2:38 Italy Battery Storage Investment Beyond MACSE

5:18 MACSE vs Merchant by Italian Price Zone

6:29 Battery Revenue Strategies Without a MACSE Contract

10:05 Battery Project Finance: MACSE, Tolling and Merchant

12:12 Second MACSE Auction and Anti-Concentration Rules

13:58 Merchant Battery Financing in Germany

16:14 What Lenders Want From a Merchant BESS Project

18:38 German Battery Revenue Saturation

20:27 Battery Optimiser Risk and Profit Share

23:12 Dynamic Grid Fees in Germany

25:25 Diversifying a Battery Portfolio Across 12 Markets

28:13 Lithuania and Finland Battery Storage Markets

30:13 Where to Invest Next: Poland

31:12 Best Performing Battery Assets in 10 Years

33:46 The Hidden Risk in Contracted Battery Revenue

Battery storage investment in Europe now depends less on whether the revenue exists and more on how it gets financed. With Italy's first MACSE auction won largely by a single player while Germany's fully merchant market is pushing lenders towards shorter, tighter debt, investors have to work out what makes a battery project bankable without a long-term contract.

Grace Kankindi, Deputy Head of Investment Management at Aquila Clean Energy, joins Ed Porter to walk through how she assesses battery investments across multiple European markets.

They cover:

- Why the first MACSE auction worked as designed, even though prices cleared low and one bidder took most of the contracts, and what new anti-concentration rules could change in round two.

- What happens to Italian battery projects that miss out on MACSE, from tolling to the capacity market, and why Italian lenders still won't back fully merchant projects.

- How lenders are financing merchant batteries in Germany, with debt terms of around 3 to 7 years instead of 15 to 20, and cash sweeps to pay debt down faster.

- The risk investors most often underprice, the optimiser, and why the lowest profit share isn't always the cheapest deal as German two-hour battery revenues fall.

- Why timing decides returns in smaller markets like Lithuania and Finland, why Poland is next on Grace's radar, and why she thinks contracted revenue is riskier than it looks.

Want to stress-test how a German battery's revenues hold up as saturation sets in? Ko, Modo Energy's AI analyst, is built for exactly these questions.

Transcript available here

Chapters

0:00 Intro

1:22 MACSE Auction Results and What People Got Wrong

2:38 Italy Battery Storage Investment Beyond MACSE

5:18 MACSE vs Merchant by Italian Price Zone

6:29 Battery Revenue Strategies Without a MACSE Contract

10:05 Battery Project Finance: MACSE, Tolling and Merchant

12:12 Second MACSE Auction and Anti-Concentration Rules

13:58 Merchant Battery Financing in Germany

16:14 What Lenders Want From a Merchant BESS Project

18:38 German Battery Revenue Saturation

20:27 Battery Optimiser Risk and Profit Share

23:12 Dynamic Grid Fees in Germany

25:25 Diversifying a Battery Portfolio Across 12 Markets

28:13 Lithuania and Finland Battery Storage Markets

30:13 Where to Invest Next: Poland

31:12 Best Performing Battery Assets in 10 Years

33:46 The Hidden Risk in Contracted Battery Revenue

Batteries earn volatile revenues, but lenders want fixed ones. Financial swaps that trade a fixed payment for floating battery revenue, from day-ahead spreads to full revenue indices, are how that gap is starting to close.

Chris Kennedy, Founder & Managing Director at Miranda Energy, joins Ed Porter in Berlin to explain how battery swaps actually work, where basis risk hides, and why he treats power volatility as an asset class in its own right.

They cover:

- Why basis risk is the most misunderstood part of day-ahead TB swaps, and how round-trip efficiency, degradation schedules, payout caps and availability adjustments bring the swap closer to what the asset really earns.

- How day-ahead swaps are evolving into total revenue swaps benchmarked to broader battery revenue indices like Modo Energy's, and why capturing more of the revenue stack cuts basis risk further.

- Why fixed-for-floating battery swaps borrow the ISDA playbook from interest rate markets, and how a TB swap let a German solar portfolio hedge the duck curve without building a battery.

- Why Chris sees volatility, not the depreciating battery, as the asset to own, and how ten-year TB swaps, credit-light offtakes for BESS SPVs and 245MW of fixed offtakes across Germany, Poland and Hungary set Amaranth Energy apart from the big trading houses.

- Chris's contrarian view: the market puts too much weight on backwardation in the TB forward curve, when spreads may prove directionally persistent as solar continues to outpace flexibility.

Want to go deeper on battery revenue swaps and indices? Sign up for free to Ko, Modo Energy's AI analyst, at modoenergy.com

Exploring a battery revenue swap? Talk to our team about using Modo Energy indices in your contracts.

Chapters:

0:00 Intro

1:19 Basis Risk in Day-Ahead Battery Swaps

3:42 Unlimited Liability, Payout Caps and Availability

6:54 Total Revenue Swaps and Battery Revenue Indices

8:21 Battery Offtakes: Profit Shares, Floors and Tolls

9:55 Fixed-for-Floating Swaps and ISDA

11:21 German Solar, Negative Rates and the Duck Curve

13:23 Virtual Battery Hedge for Solar Portfolios

16:48 Three Use Cases for TB Swaps

17:27 Power Volatility as an Asset Class

19:57 Prop Shops vs Trading Houses

22:16 Credit-Light Offtakes for BESS SPVs

23:52 Options, Volga and Exotic Battery Hedges

26:22 Poland, Hungary and Emerging BESS Markets

29:48 Spain and Negative Power Prices

31:44 The Ideal Swap Counterparty

33:31 Contrarian View

Batteries earn volatile revenues, but lenders want fixed ones. Financial swaps that trade a fixed payment for floating battery revenue, from day-ahead spreads to full revenue indices, are how that gap is starting to close.

Chris Kennedy, Founder & Managing Director at Miranda Energy, joins Ed Porter in Berlin to explain how battery swaps actually work, where basis risk hides, and why he treats power volatility as an asset class in its own right.

They cover:

- Why basis risk is the most misunderstood part of day-ahead TB swaps, and how round-trip efficiency, degradation schedules, payout caps and availability adjustments bring the swap closer to what the asset really earns.

- How day-ahead swaps are evolving into total revenue swaps benchmarked to broader battery revenue indices like Modo Energy's, and why capturing more of the revenue stack cuts basis risk further.

- Why fixed-for-floating battery swaps borrow the ISDA playbook from interest rate markets, and how a TB swap let a German solar portfolio hedge the duck curve without building a battery.

- Why Chris sees volatility, not the depreciating battery, as the asset to own, and how ten-year TB swaps, credit-light offtakes for BESS SPVs and 245MW of fixed offtakes across Germany, Poland and Hungary set Amaranth Energy apart from the big trading houses.

- Chris's contrarian view: the market puts too much weight on backwardation in the TB forward curve, when spreads may prove directionally persistent as solar continues to outpace flexibility.

Want to go deeper on battery revenue swaps and indices? Sign up for free to Ko, Modo Energy's AI analyst, at modoenergy.com

Exploring a battery revenue swap? Talk to our team about using Modo Energy indices in your contracts.

Chapters:

0:00 Intro

1:19 Basis Risk in Day-Ahead Battery Swaps

3:42 Unlimited Liability, Payout Caps and Availability

6:54 Total Revenue Swaps and Battery Revenue Indices

8:21 Battery Offtakes: Profit Shares, Floors and Tolls

9:55 Fixed-for-Floating Swaps and ISDA

11:21 German Solar, Negative Rates and the Duck Curve

13:23 Virtual Battery Hedge for Solar Portfolios

16:48 Three Use Cases for TB Swaps

17:27 Power Volatility as an Asset Class

19:57 Prop Shops vs Trading Houses

22:16 Credit-Light Offtakes for BESS SPVs

23:52 Options, Volga and Exotic Battery Hedges

26:22 Poland, Hungary and Emerging BESS Markets

29:48 Spain and Negative Power Prices

31:44 The Ideal Swap Counterparty

33:31 Contrarian View

Poland's battery storage market is skipping the pilot phase, with its first projects starting at 200MW, a size it took Germany five years to reach. And because of the way Poland runs its grid, two identical batteries in different locations can earn very different amounts. With over 2GW of batteries expected on the grid by 2028, the market is about to change fast.

Ed Porter is joined by Aleksandra Radwańska, Country Lead Poland at Entrix, and Jan Kłoczko at Entrix, to unpack what it takes to optimise batteries in a market scaling this fast.

They cover:

• How two identical batteries in different parts of Poland can earn very different amounts, and why each needs its own scorecard.
• Why getting a new battery approved to support Poland's grid can take up to two years, while everyone is still learning the rules.
• How over 2GW of batteries expected by 2028, in a country that peaks at around 25GW, will change the way power is traded in Poland.
• What battery owners are choosing between: guaranteed-income deals that help secure loans, or betting on the market.
• Why Poland's single national electricity price is coming under strain as the grid gets more congested.

Want to see how battery assets in Poland are performing? Ko, Modo Energy's AI analyst, is built for exactly these questions.

CHAPTERS

0:00 Poland's battery storage market: straight to 200MW

1:17 Central dispatch and location-based battery revenues

4:11 Credible battery optimisers vs good pitch decks

6:46 Benchmarking optimiser performance per asset

9:08 Ancillary services prequalification in Poland

12:47 Starting with 100-200MW batteries: no sandbox

13:19 Intraday liquidity and the TSO balancing crackdown

15:27 Wholesale trading patterns and Poland's duck curve

18:44 Over 2GW of batteries by 2028

20:11 Route to market: floors, tolls and merchant

24:01 Flexible and asymmetric grid connections

27:29 Lessons from bringing large batteries online

28:48 Contrarian view: one national price, a constrained grid

30:47 Contrarian view: collaboration over complaint

Poland's battery storage market is skipping the pilot phase, with its first projects starting at 200MW, a size it took Germany five years to reach. And because of the way Poland runs its grid, two identical batteries in different locations can earn very different amounts. With over 2GW of batteries expected on the grid by 2028, the market is about to change fast.

Ed Porter is joined by Aleksandra Radwańska, Country Lead Poland at Entrix, and Jan Kłoczko at Entrix, to unpack what it takes to optimise batteries in a market scaling this fast.

They cover:

• How two identical batteries in different parts of Poland can earn very different amounts, and why each needs its own scorecard.
• Why getting a new battery approved to support Poland's grid can take up to two years, while everyone is still learning the rules.
• How over 2GW of batteries expected by 2028, in a country that peaks at around 25GW, will change the way power is traded in Poland.
• What battery owners are choosing between: guaranteed-income deals that help secure loans, or betting on the market.
• Why Poland's single national electricity price is coming under strain as the grid gets more congested.

Want to see how battery assets in Poland are performing? Ko, Modo Energy's AI analyst, is built for exactly these questions.

CHAPTERS

0:00 Poland's battery storage market: straight to 200MW

1:17 Central dispatch and location-based battery revenues

4:11 Credible battery optimisers vs good pitch decks

6:46 Benchmarking optimiser performance per asset

9:08 Ancillary services prequalification in Poland

12:47 Starting with 100-200MW batteries: no sandbox

13:19 Intraday liquidity and the TSO balancing crackdown

15:27 Wholesale trading patterns and Poland's duck curve

18:44 Over 2GW of batteries by 2028

20:11 Route to market: floors, tolls and merchant

24:01 Flexible and asymmetric grid connections

27:29 Lessons from bringing large batteries online

28:48 Contrarian view: one national price, a constrained grid

30:47 Contrarian view: collaboration over complaint